The Bottom Line
As a separate reporting state, South Carolina generally requires affiliated businesses to file separate entity returns.1 However, in a 2023 decision, Tractor Supply Co. v. S.C. Dep’t of Revenue, the South Carolina Administrative Law Court (the “ALC”) held that the South Carolina Department of Revenue (the “Department”) could force combined reporting for a unitary business under the alternative apportionment statute in effect at that time.2 The South Carolina Court of Appeals recently affirmed the ALC’s decision, upholding combined unitary reporting as a reasonable alternative apportionment method.3
The South Carolina Court of Appeals found that the evidence on record supported the ALC’s finding that the standard apportionment method did not fairly represent the taxpayer’s business activity within the state. The court also found that the ALC’s determination that combined unitary reporting was an allowable alternative apportionment formula was supported by the Supreme Court of South Carolina’s decision in Media General v. S.C. Dep’t of Revenue.4 Additionally, the court agreed with the ALC that the Department’s guidance addressing combined unitary reporting as an alternative apportionment method, South Carolina Revenue Ruling 15-5, was not an improper regulation under the Administrative Procedures Act.
Action Items and Important Dates
In 2024, South Carolina’s alternative apportionment statute, S.C. Code Ann. § 12-6-2320, was amended to specifically address combined unitary reporting; therefore, the impact of the court’s decision is primarily limited to tax periods before the 2024 tax year.5
- 1S.C. Code Ann. § 12-6-50(15). See also S.C Code Ann. § 12-6-5020. Note that South Carolina does allow affiliated businesses to file a post-apportioned nexus combined return or a pre-apportioned unitary combined return.
- 2No. 19-ALJ-17-0416-CC (S.C. Admin. Law Ct., Aug. 8, 2023). See also Tractor Supply Co. v. S.C. Dep’t of Revenue, No. 19-ALJ-17-0416-CC (S.C. Admin. Law Ct., January 1, 2024)(Order Denying Second Motion for Reconsideration).
- 3Tractor Supply Co. v. S.C. Dep’t of Revenue, Appellate Case No. 2024-000013 (S.C. Ct. App., June 17, 2026).
- 4See Media General Communications, Inc. v. South Carolina Dept. of Revenue, 388 S.C. 138 (2010).
- 5S.C. Senate Bill 298, Section 1 (Act No. 113) (amending S.C. Code Ann. § 12-6-2320).